Our Readers' Opinions
February 1, 2013
Let us not waste the ongoing financial crisis

The OECS is in crisis. The crisis his manifested in several ways. Mainland Caricom countries have been growing at between three and four per cent per annum. The countries of the OECS have rarely reached even the one per cent predicted for them. Montserrat made it clear that it was neither an independent country nor a colony, but a part of the UK. Its credit rating went up. This, at a time when that of the other islands and also of the CDB were going down.{{more}} Antigua has had negative growth rates for several years. It has been hit by a double whammy. The financial crisis coincided with the unmasking of the billion dollar pyramid scheme that operated from its shores. St Kitts has been undergoing a structural programme with the IMF. Hardly surprising. Its Public Debt was 200 per cent of its annual income (GDP). The recommended high is 90 per cent. The situation in Grenada is even more grim. Their credit rating has gone down and they have had difficulty paying the Civil Service. Taiwan has treated that country as a bankrupt, seeking a court order in the USA to have monies due to Grenada paid instead directly to Taiwan.

The crisis, however, should not be a cause for despair. These days crises are seen as rare opportunities to effect changes that would otherwise not have been possible. For SVG, changes are postulated at three levels: domestic, OECS and Caricom.

Democracy remains the best form of government. The adversarial nature of its politics can, however, be inimical to growth. Governments avoid painful decisions and concentrate on getting re-elected. Oppositions oppose for the sake of opposing and promise the earth if elected. When elected, however, they are often not able to do any better. As the Fiscal Cliff in the USA shows, these problems are not peculiar to SVG. Over time, several devices have evolved to try and cope with the situation. They include: Governments of national unity; cross party committees; and the entrusting to civil servants certain powers that the Government of the day cannot change. The Office Budgetary Responsibility in the UK is a good example. In SVG, we have not made much use of these, preferring to carry our internecine feuding to the bitter and self-destructive end. Witness the Argyle airport.

With a mere 20,000 acres of cultivable land, SVG cannot rely solely on agriculture for its development. Its tiny domestic market and lack of natural resources make the emergence of industries difficult. The emphasis has to be on tourism and almost by definition, you cannot have tourism without ease of access. To get from the UK to Barbados (5,000 miles) costs £600. To get from Barbados to SVG (100 miles) costs £200. To this extra cost must be added the terrible inconvenience of often having to knock about in Barbados for hours trying to get to and from SVG. Who wants to go through all this? Yet, there is opposition to the international airport. This has not been the only evidence of our crass stupidity. One Government set up the milk plant and sugar factory. Its successor in office closed them down. They put in their place winter vegetables which lasted as long as Miss Janey’s fire. Today, we import not only milk, but cattle dung as manure. We do not seem to have grasped the fact that given the tiny size of our country, almost everything is marginal and once we have got a project going, we just have to put our shoulders to the wheel and make it work. We have to make use of existing devices and develop others for minimising the consequences of the adversarial politics inherent in democracy.

The countries of the OECS have about 600,000 persons. This is the population of a medium sized town in many countries. Yet, in the OECS, we have seven full fledged Governments and the OECS itself for co-ordinating their activities. The region has more ministers than successful entrepreneurs. Significantly, the IMF has pointed out that even before the economic crisis, the Public Debt situation in the OECS was becoming worrying. In a word, our operating cost is exceeding our revenue and we are relying on deficit financing and public debt. As the situation in Grenada already makes clear, this is not sustainable. The private sector, when confronted by this situation, cuts overheads and consolidates. Has not the time come for the countries of the OECS to do likewise? The availability of the Internet, video-conferencing and fast ferries should facilitate the process of reducing the number of governments.

Not only mainland Caricom countries, but Ghana, Uganda, Mozambique and Bolivia, among others, have been prospering during the crisis. The difference between us and them is this: they have bigger populations and therefore large domestic markets. They also have huge land areas where they have discovered minerals and carry out scale commercial farming. Individually, we can do little about this, but as Caricom we can. A functioning economic union of Caricom would, in its physical configuration, look no different from Indonesia, though much smaller. There are indications of what is possible. Trinidad has talked of doing commercial farming in Guyana. Belize has population inflows, both because of its residential tourism policies and the unsettled nature of its neighbourhood. No one ever thought a full economic union of Caricom would be easy, but we have to have the vision, the road map and be prepared to deal with the road blocks. Let us seize the moment and not fiddle while Rome burns.